Business News Archives for 2018-04

The U.S. Economy Grew

The U.S. economy grew at 2.3% in the first quarter, better than the consensus estimate of 2.0% but a slowdown from the near 3% growth of the prior three quarters. Persistent problems with seasonal adjustment of first quarter data and a lull in consumer activity weighed on first quarter growth. We expect U.S. growth to accelerate over the rest of the year as these temporary factors roll off, with a strong job market, fiscal stimulus, and consumer and business spending providing potential support for global demand. (LPL)

First quarter inflation data was as expected. The core personal consumption expenditures (PCE) reading for March of +2.5% was in line with consensus forecasts and up from +1.9% in the fourth quarter. Another inflation measure the Fed follows, the Employment Cost Index, rose 0.8% quarter over quarter. Private sector wages and salaries rose 2.9% year over year, the most of the expansion and following a 2.8% increase in the previous quarter. (LPL)

Wells Fargo is facing another Labor Department investigation of its retirement plan services unit. The review centers on whether the bank has been pushing participants in low cost 401(k) plans to roll holdings into more expensive IRAs at the bank. (WSJ)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Up for April

The Commerce Department says orders for long-lasting manufactured goods rose 2.6% overall in March, but spending that tracks business investment spending fell for the third month out of the past four.

First quarter earnings results have been excellent so far, with about 30% of S&P 500 companies having reported. Earnings are tracking to a 22% year-over-year increase, well above the 18.5% increase expected. Revenue growth is tracking to a solid 7.7% year-over-year increase. (LPL)

International developed equities have outperformed slightly year to date. The weak dollar explains virtually all of the outperformance vs. the S&P 500. Still, international diversification has generally helped buoy portfolios this year, which has not been the case in recent years and is encouraging. (LPL)

Intel, Oregon’s largest employer, reported first-quarter net income of $4.45 billion. The world's largest chipmaker posted revenue of $16.07 billion. Intel shares have climbed 15% since the beginning of the year. (AP)

Join us this weekend for Financial Focus Radio when Josh and I will tell you how to navigate the choppy waters of the markets.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

The Leading Economic Index Jumped

The Leading Economic Index (LEI) jumped 0.3% in March, after being up 0.7% in February and 0.8% in January. This index shows a picture of future economic health. This shows little reason to expect a recession over the next 12 months. Year over year, this index is up +6.2%, well above the negative year-over-year signal that has preceded every recession going back to the early 1970s.

Portland’s ESCO Corp has sold to the Scottish Weir Group for $1.29 billion. ESCO makes equipment for surface mining and construction. Weir said the deal will improve its presence in those markets. The privately held ESCO employs about 3,000 people, including 350 in Portland. ESCO's sales totaled $632 million last year. ESCO has 10 factories, six foundries and 22 service centers in 19 different countries. (OregonLive)

The craft beer market may have reached maturity. Bend's Deschutes Brewery has announced that it would delay, and possibly scale back development of its east coast brewery in Roanoke, Virginia. In explaining the decision, Deschutes pointed to a dip in sales last year, following a softening beer market generally. (EagerLaw)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

NWQ AM Financial News

Comcast has formalized its offer for British broadcaster Sky, along with commitments to maintain its annual budget and editorial board independence, in a deal valued at about $31B. Comcast said the "superior" cash bid was a 16% premium to the existing offer from Twenty-First Century Fox which has also been trying to buy the 61% of Sky that it doesn't already own (WSJ).

How does your bonus stack up? Google CEO Sundar Pichai was awarded 353,939 restricted shares before being promoted in 2014, those vest today. Currently worth about $380M, it's one of the largest single payouts to a public company executive in recent years. Alphabet's stock has surged 90% since the grant date, compared with a 39% advance of the S&P 500. (SA)

Boeing increased full-year earnings guidance citing a positive market outlook across its defense and aerospace businesses, after reporting first-quarter results well above market expectations. Defense contractor Northrup Grumman similarly reported a strong start to the year, as it benefited from the push by the US government to upgrade its military hardware and modernize its IT platforms.  Facebook is also slated to report later today in one of the most anticipated earnings calls of the year (FT)

With Northwest Quadrant Wealth Management a Registered Investment Advisor I am Josh Fenili.

NWQ AM Financial News

We're in the thick of earnings season, and it's been very strong so far- Robust demand for construction equipment in North America along with the recent upswing in oil prices helped Caterpillar bulldoze past Wall Street's sales and profits expectations for the first quarter this morning.  Similar news from United Technologies, which makes everything from airplane engines to elevators, first quarter sales of $15.2bn were up 10 per cent over the prior year, comfortably exceeding market expectations.  Even more of a surprise, Coca-Cola reported better than forecasted sales and profits in the first quarter, as the fizzy drinks maker cuts prices and adapts its portfolio away from soda to stoke growth. (FT)

Speaking of earnings, this quarter stocks have been unusually non-reactive to earnings reports:  Companies that reported stronger-than-expected earnings have seen their shares on average rise by just 1/10 of a % two days before the earnings release through two days after, well below the five-year average increase of 1.1%. (WSJ)

A Silicon Valley company bought Portland-based Viewpoint Construction Software for $1.2 billion in cash yesterday. It appears to be the biggest deal ever for a Portland tech company.  The buyer is Trimble, which makes technology for the construction, agriculture and transportation markets. The California company reported revenue of $2.7 billion last year and said it expects about $200 million in additional revenue from the Viewpoint acquisition in 2018 (Oregonian).  

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Dollar Bulls Are Back For Now

The yield on the Ten year US Treasury note was on the cusp of 3% for the first time in more than four years this morning, as concerns about inflation have returned to the market.  Oil’s move above $70/barrel and rising metal prices have fanned inflation worries, which for much of the post-financial crisis period has remained subdued and helped sustain a rally in bonds. (FT)
Dollar bulls are back for now - the Greenback climbed to its highest level I a month and a half this morning, with investors bidding up the currency ahead of a slate of key economic events later this week, including most notably US GDP figures due Friday (SA).
Nearly 200 companies listed on the S&p500 are slated to report results this week from companies including Amazon, Facebook, Lockheed Martin, American Airlines, and Exxon Mobil.  Earnings are up over 20% so far year-on-year this quarter, with revenues up 7.5% on average. (WSJ)
The S&P 500 is up 3, and the NASDAQ is up 18.  The MSCI international index is down about 15/100 of a %.
Oil is down $1.10 at $67.30 a barrel. 
Gold is down $10 at $1328 an ounce.
With Northwest Quadrant Wealth Management a Registered Investment Advisor I am Josh Fenili.

Earnings Roll In

Hillsboro based Phoseon Technology, maker of semiconductor light for industrial applications, will expand its factory by more than 50%. Their work force has grown from 125 to 175 over the past two years. (OregonLive)

Market breadth appears to be in favor of the bulls. There are signs that the 2018 bottom for U.S. equities has may have taken place. We like to look at advance/decline (A/D) lines to gauge overall market strength, as this shows how many stocks are going up versus down. In healthy markets, we want to see higher trending A/D lines as a sign of underlying market strength. This week we are seeing that. (LPL)

The Mortgage Bankers Association says applications to refinance a home loan are nearly 10% lower than a year ago. Mortgage applications to purchase a home are 10% higher than a year ago.

Procter & Gamble, whose brands include Pampers diapers and Gillette razors, is buying the consumer health business of Germany's Merck for $4.2 billion. (Reuters)

Nike's vice president of footwear, Greg Thompson, has left the company, the latest in a series of executive departures at the sportswear maker. (Reuters)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Extra Innings for Tax Filing

Gross domestic product (GDP) in China rose +6.8% in the first quarter. (AP)

China's central bank announced a surprise cut in bank reserve requirements, reducing the amount of cash most commercial and foreign banks must hold in order to pay back loans obtained via the central bank's medium-term lending facility. The move is intended to free up lending for smaller firms. (LPL)

The S&P 500 Index has closed above previous resistance of 2675. The move through this level is noteworthy. Fundamentally, we remain positive on earnings gains propelling market gains in 2018. (LPL)
The Commerce Department said housing starts rose 1.9%. Despite the rebound in homebuilding last month, activity appears to be slowing. Single-family homebuilding, which accounts for the largest share of the housing market, fell 3.7%. (CNBC)

U.S. pork exporters will soon be free to ship meat to Argentina for the first time in 26 years after the two countries thrashed out an agreement to overturn an Argentinian import ban. (Reuters)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

It's Tax Day!

Earnings season kicks into high gear this week with about 15% of the S&P 500 reporting. Consensus expects S&P 500 earnings to increase 18% year over year, with increases in all 11 S&P sectors.

Stocks tend to hold up well when military actions are contained. Historically, market reactions to contained military conflicts have tended to be limited and short-lived, with big declines almost always driven by deteriorating economic cycles.

Inflation readings head higher, but not enough to impact the Fed. The latest readings for the Consumer Price Index (CPI) and the Producer Price Index (PPI) were released last week. Both moved higher but remain at manageable levels.

Retail sales rebound, rising 0.6% month over month in March. Excluding autos and gas, sales rose 0.3%. Year-over-year comparisons accelerated across the board, jumping above 5%. Tax refunds may have also helped boost retail sales in March.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Fear Friday the 13th?

Year to date, the MSCI Emerging Markets Index has returned 1.8%, ahead of both the developed international equity benchmark, which has returned 0.5%, and the S&P 500 Index, which has lost 0.6%.

It's still unclear if announced tariffs will be imposed, and there is no doubt risk of market disruption from a trade war with China is still present. However, even the higher total value of tariffs (estimated at $81 billion) pales versus the potential $800 billion in stimulus being put into the U.S. economy in 2018 via tax cuts, deficit spending, and the return of overseas cash.

Further evidence of a tight labor market was this week's jobless claims report, as applications for unemployment benefits fell 9,000 to 230k. The unemployment rate (4.1%) and underemployment rate (8.0%) are both at cycle lows.

Fear Friday the 13th? Although this is totally random, Friday the 13th has had weaker performance for stocks than your average Friday. The average gain on Friday the 13th (since 1928) for the S&P 500 has been only 0.02%, versus the average Friday gain of 0.05%. Not to mention, the last time there was a Friday the 13th during April was in 2012, when the S&P 500 dropped 1.25%--for the worst Friday-the-13th drop going back 15 years. (LPL)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Oil Posts a 4-year High

The Labor Department said consumer prices fell 0.2% in March. The first decline in 10 months. In the last 12 months the CPI is up 2.4%. Gas prices tumbled 4.9%, healthcare costs up 0.4% and apparel prices fell 0.6%.

The Mortgage Bankers Association says total mortgage applications fell 1.9% last week. It is 5.5% lower than one year ago. Refinancing fell to the lowest level in 10 years, down 2% for the week and off nearly 13% from a year ago. Refinances made up just 38% of total loan activity.

Oil prices hit new 2018 highs as missile strikes on Saudi Arabia added to the market's worries about escalating conflict between the United States and Russia in Syria. West Texas Intermediate ended Wednesday up 2%. Its best closing since December 3, 2014. (CNBC)

The Wall Street Journal reports hedge-fund manager John Paulson owes about $1 billion in federal and state taxes this year. His firm has seen assets under management plunged from $38 billion to less than $9 billion in the last year.

Bed Bath & Beyond had a quarterly profit of $1.48 per share, above estimates. Same store sales were down 0.6%.

S&P 500 is up 12 and the NASDAQ is up 37. The MSCI international index is higher.

Oil is down 41 cents at $66.41 a barrel.

Gold is down $11 at $1349 a Troy ounce.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Big Swings

First quarter earnings season kicks off this week. Several financial companies will report results on April 12-13. The S&P 500 Index has grown earnings at a double-digit clip three out of the past four quarters, and we believe is likely to make it four out of five. S&P 500 earnings, are expected to increase 18% year over year, it should get a boost from the new tax law, on top of strong economic growth globally, robust U.S. manufacturing activity, and a weaker U.S. dollar. (LPL Research)

There's lots of good news for Oregon's economy. Oregon had the fifth-fastest job growth rate of any state from January 2017 - January 2018. And even middle-class jobs are on the upswing in the state. (Eager Law)

In Oregon, the tariffs would apply to such ag products as hazelnuts, pears, berries, apples and wine. China is Oregon's fourth-largest importer of agriculture products, behind South Korea, Canada and Japan. In 2017, Oregon sent more than $320 million in agricultural products to China. China will impose a 15% tariff on hazelnuts. However, China already has a 25% tariff on hazelnuts. (The Register-Guard)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

NWQ AM Financial News

Wall Street's major stock indexes rose yesterday as a softer stance by U.S. policymakers on China tariffs powered a rebound from last week's sell-off, though stocks pared the large gains we saw earlier in the day in the final minutes of the trading session.

And just when you thought the housing market couldn’t get any hotter, the prospect of rising mortgage rates had buyers even more frenzied in March, according to a report out from Credit Suisse.  The monthly survey of real estate agents showed that an index of buyer traffic around the country rose substantially.   Agents’ commentary “remains centered on pent-up demand, especially in more affordable price points, given the persistent inventory shortage.”  The threat of rising mortgage rates is also starting to be felt. Still, as one Seattle real estate agent put it, “Rate increases are causing a sense of urgency, but there is not enough inventory to sell.”

Today is a big day for Facebook and the CEO Mark Zuckerberg who will begin a 2 days of congressional hearings about Facebook user data being improperly used by a political consultancy during the 2016 election.  One of the options congress is looking as is whether Facebook should be regulated.  Shares of Facebook are down over 15% since the news arose.


Wage Growth

Let’s dig a little deeper into that jobs report released on Friday. The two-month average of over 200,000 remains strong for this point in the economic cycle and leaves the overall trend of solid jobs growth intact. Wage growth, was in line with expectations at 2.7% year over year, a slight acceleration over February's 2.6%. The jobs report confirms the overall picture of solid economic growth, with little in the new numbers to push the Federal Reserve to move faster than its projected three rate hikes in 2018. (LPL)

The manufacturing industry led job gains for the month of March, adding to the sector's streak of solid employment numbers over the past year under President Donald Trump.

The Labor Department said the manufacturing sector added 22,000 jobs in March bringing its 12-month gain to 232,000 jobs. Employment in manufacturing has steadily increased since Trump's election; the manufacturing industry has added 293,000 jobs since November 2016, according to the Department of Labor. Business services sector was up 33,000 jobs. The construction industry was the jobs loser cutting 15,000 jobs in March. The retail industry cut 4,400 jobs in March.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

103,000 New Jobs

The Department of Labor says the economy added 103,000 new jobs in March. The private sector added
102,000 jobs. The unemployment rate stands at 4.1%.

Portland based Schnitzer Steel reported quarterly earnings of $1.42 per share. That included tax benefits of $0.52 per share associated with the Trump tax reform legislation. (BUSINESS WIRE)

Though disruption to corporate supply chains and higher prices for U.S. consumers are still risks surrounding escalating trade tensions, it is important to keep in mind that the total dollar value of tariff actions to date is only about $32 billion, compared with potentially $800 billion in fresh stimulus being put into the U.S. economy in 2018 alone from tax cuts, the recently-passed federal spending bill, and repatriation of overseas cash. Estimates suggest a potential negative impact of 0.3% on U.S. gross domestic product (GDP) at most, and an even smaller potential hit to China's GDP. (LPL)

Join us this weekend when Troy and Tyler will be back in the saddle to round-up the markets and give you the truth in wealth building.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

ADP March Jobs Report

The ADP March jobs report says the private sector added
241,000 jobs. Job gains were broad-based, spread across both business size and sector. Service providers added 176,000 while goods-producing industries contributed 65,000. Construction and manufacturing led the latter category, adding 31,000 and 29,000 respectively. Medium-sized firms, with 50 to 499 employees, were the top jobs producers with 127,000 new hires, while large firms added 67,000 and small businesses rose by 47,000.

The Commerce Department says factory orders increased 1.2% in March. Orders for mining, oil field and gas field machinery climbed 1.8% and computers up orders were up 3.5%.

The Institute of Supply Management's service sector fell to 58.8 in March. The index shows the service sector has expanded for 98 consecutive months, while the overall economy has grown for the 103rd consecutive month.

J.M. Smucker will buy pet food maker Ainsworth Pet Nutrition for $1.9 billion in cash. The food maker is was exploring sale of its baking business, which includes the Pillsbury and Martha White brands. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Tariff Scare

Stocks are lower this morning as China announced additional tariffs against the U.S. on 106 U.S. products. The tariffs are designed to target up to $50 billion of U.S. products annually. (CNBC)

We are back into correction territory today after yesterday’s gains pushed them less than 10% away from their recent record highs. (CNBC)

The Paychex Small Business Jobs Index decreased 0.22% from last month and is down 0.27% from a year ago. Paychex said national hourly earnings for the month were $25.67, up 2.73% from last year.

Oregon could be getting its first tech IPO in more than a decade. Clark County laser manufacturer nLight has filed to go public last week. The last Oregon tech company to go public was Cascade Microtech in 2004. The company has more than 1,000 employees at sites around the world. (OregonLive)

Dave & Buster's reported a quarterly profit of 61 cents per share, beating estimates. The restaurant chain's revenue matched forecasts, but comparable store sales posted a larger than expected decline. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Quarterly Win Streak Ends

Quarterly win streak ends at nine for the S&P 500. The S&P 500 slipped 0.8% during the volatile first quarter that saw the index suffer its first 10% correction since early 2016. Weakness was driven by several factors, including Federal Reserve rate hike fears, which were sparked by evidence of wage pressures and the change in leadership at the central bank; and escalating trade tensions with China. Winners in the quarter included: growth, small caps, technology, consumer discretionary, and emerging markets. (LPL)

Market fundamentals remain favorable. The down quarter does not necessarily mean fundamentals have deteriorated. While risks associated with protectionist U.S. trade policy should be acknowledged, we continue to expect economic growth to accelerate this year, in large part due to the effects of the new tax law, which should give earnings a significant boost. (LPL)

The Institute for Supply Management index of national factory activity fell to 59.3 in March.  Seventeen industries including fabricated metal products, computer and electronic products, machinery and chemical products reported growth last month. Apparel, leather and allied products was the only industry reporting a decrease.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Start the Second Quarter

China is rolling out new tariffs on meat, fruit, and other products from the United States in retaliation against taxes approved by President Donald Trump on imported steel and aluminum. (CNBC)

Under Armour has told users of its MyFitnessPal app of a data breach, with 150 million users affected. The athletic apparel maker did say that payment card information was not affected by the breach.

Workers at a Portland Burgerville are filing for a federal union election. The 2-year-old union is pushing for a $5 hour raise. If successful this would be the first federally recognized fast-food workers union in the U.S. The Industrial Workers of the World known for its anti-capitalist leanings has previously tried to organize workers at Starbucks and Jimmy John's. Burgerville, owned by Holland Inc., has about 1,500 employees in Oregon and southern Washington. (OregonLive)

Boyd Coffee is ending operations in Portland and Eugene. Terminating 230 people, including 135 in Oregon. Boyd sold in 2017 to Texas coffee roaster, Farmer Bros., for $58.6 million in cash and stock. Operations are moving to Texas. Boyd dates its founding to 1900 in Portland. (OregonLive)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.


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